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This chapter considers the moral hazard stage of the relationship between Congress and the IMF and World Bank. The chief exogenous shocks came from the 1995 Mexican peso crisis and 1997 Asian financial crisis, which caused many to reevaluate the role of the IMF in preventing financial instability. The chief endogenous change came with Republican control of the House during the Bill Clinton administration, ushering in an era of divided government in reverse. The chapter argues that the Republicans had connected party ideology to a very specific legislative agenda during the election, tying...

This chapter considers the moral hazard stage of the relationship between Congress and the IMF and World Bank. The chief exogenous shocks came from the 1995 Mexican peso crisis and 1997 Asian financial crisis, which caused many to reevaluate the role of the IMF in preventing financial instability. The chief endogenous change came with Republican control of the House during the Bill Clinton administration, ushering in an era of divided government in reverse. The chapter argues that the Republicans had connected party ideology to a very specific legislative agenda during the election, tying committee chairs more tightly to the majority party. Congressional advocacy developed with the growing use of appropriations bills to alter the course of public policy. As the constituencies for the Bretton Woods institutions fractured or disintegrated, the results were extended funding delays and additional policy demands in the form of the Meltzer Commission, debt relief, shift in the use of concessional loans to grants, and debt relief. By the end of the stage when the Argentine crisis occurred, the IMF searched openly for a mission and the World Bank’s role appeared to be obsolete, given the volume and sophistication of disintermediated capital flows.